Apple sitting on millions of unsold plastic iPhones

Apple is said to be sitting on more than three million unsold iPhone 5C smartphones. The report comes from Digitimes, so take it with a grain of salt.

Digitimes cites "upstream supply chain sources" which loosely translates into "people from Taiwan-based ODMs." The sources claim iPhone 5C shipments went off a cliff by the end of 2013 and as a result Apple is now stuck with about two million units at Pegatron and more than a million units held by telecoms and carriers across the world.

Demand for the iPhone 5C has always been a lot weaker than demand for the 5S. The 5C is basically a repackaged iPhone 5, clad in a colourful polycarbonate shell. Its biggest problem is not the spec - it's the price. For some reason Apple thought it could sell it for $100 less than the 5S, which it couldn't, not even to its fundamentalist user base.

Looks were another problem. The white one looks rather nice, which is what we've come to expect from Apple and Sir Jonathan Ive. However, the rest of the line-up is a bit tacky and as a result it is very hard to see an iPhone 5C in the wild in any colour other than white.

Apple reportedly stopped placing orders for the 5C at the end of 2013, after a single quarter of sales. The question is what Apple plans to do about it. Offering a price cut would be a nice way of trimming inventory levels, but what about long-term prospects? Will Apple even bother with a cheaper iPhone this year?